What is Audit?

Switzerland is known for its robust financial sector, and auditing plays a significant part in maintaining this reputation. For businesses operating within the country, understanding the Swiss audit system is an essential part of maintaining compliance and ensuring financial health. This article provides a comprehensive guide to the process of auditing in Switzerland, from an overview of the landscape to a step-by-step rundown of what to expect.

An Overview of the Swiss Auditing Landscape

The auditing environment in Switzerland is governed by the Swiss Code of Obligations, which stipulates the auditing requirements for businesses. The majority of companies are obliged to undergo an audit on an annual basis. The Federal Audit Oversight Authority (FAOA) is the regulatory body responsible for the oversight of auditors and audit firms. They ensure that audits are carried out with integrity and in accordance with Swiss Auditing Standards.

Switzerland adopts a two-tier audit system, which categorises businesses into two groups: those subject to ordinary audits and those subject to limited statutory audits. The former is mandatory for larger companies who exceed two of the following three thresholds in two successive business years: total assets of CHF 20 million, sales revenue of CHF 40 million, or an average of 250 full-time employees per year. Smaller companies not meeting these thresholds are subject to limited statutory audits, providing they request it or if it is stipulated in their articles of association.

The Step-by-Step Process of Auditing in Switzerland

The auditing process in Switzerland commences with the appointment of an auditor. The auditor, in accordance with the Swiss Auditing Standards, will then plan the audit, taking into account the company’s operational structure, business activities, and risk assessments. They will also consider the company’s internal control system. This planning stage is crucial for identifying potential areas of concern which will require a more detailed investigation during the audit.

Following the initial planning, the auditor conducts an in-depth investigation of the company’s accounts and financial statements. This entails analysing the data, verifying transactions and balances, and checking for compliance with relevant accounting standards. The auditor also ensures that the financial statements provide a true and fair view of the company’s financial position. Upon completion, the auditor will issue a report, providing an opinion on the financial statements. The report is then presented to the shareholders at the annual general meeting.

Understanding the auditing process in Switzerland is crucial for maintaining a solid financial footing and ensuring regulatory compliance. Though the process may seem daunting, it is designed to ensure the integrity of Swiss businesses and protect the interests of their stakeholders. Always remember to consult with a professional auditor or legal advisor to ensure your business meets its auditing obligations. By doing so, you uphold not only the law, but also the high standard of financial responsibility that is a hallmark of Swiss business.